Published 4:00 am, Friday, May 7, 1999

Civil libertarians and high-tech executives cheered yesterday after a federal appeals court in San Francisco said government rules limiting export of encryption software violate free speech.

Encryption software scrambles e-mail messages and other electronic files so they can't be read except by people who have the right software "key."

Online activists have long sought to overturn current export controls. The government has maintained that it has a national security interest in preventing powerful encryption software from falling into the hands of terrorists and rogue nations.

In yesterday's 2-to-1 ruling in a case brought by a former Berkeley mathematician, Judge Betty Fletcher of the U.S. Circuit Court of Appeals in San Francisco agreed with the civil libertarians.

Noting the growing use of e-mail and computers "in this increasingly electronic age," Fletcher wrote that encryption software gives Americans the "ability to shield our affairs from prying eyes" and ruled that the government regulations that seek to control this technology therefore "strike deep into the heartland of the First Amendment."

"The court went out of its way to note the importance of encryption and how it relates to privacy," Lemmey said.

Although the appeals court ruling has great symbolic value, it doesn't give individuals or companies carte blanche to start exporting encryption software, said Cindy Cohn, the San Mateo attorney who successfully argued the case.

It is virtually certain that the government will either ask the Court of Appeals to reconsider the ruling or else bring the case up to the Supreme Court for a final ruling, said Michael Froomkin, a law professor at the University of Miami.

In Washington, spokeswomen for the departments of Justice and Commerce, which control encryption licenses, said they were reviewing the decision and had no further comment.

The case was brought in 1995 by mathematician Daniel Bernstein, who had spent several years unsuccessfully seeking government permission to distribute encryption software he had written. In 1997, a federal judge agreed that the export rules infringed on Bernstein's First Amendment rights to publish his mathematical work. The federal government appealed, setting the stage for yesterday's ruling. Cohn said she expects the government will ask the courts to leave the current export controls in place until yesterday's ruling goes before a higher court.

The case has been closely watched in Silicon Valley, where many companies have objected to current encryption controls on commercial grounds.

"Controls on encryption weaken Silicon Valley and hurt our economy more than any terrorist could," said former San Jose Police Chief Joseph McNamara, now a research fellow at Stanford's Hoover Institution and a critic of the government's stance on encryption.

"You can't put the genie of technology back into the bottle, as the government has attempted to do," he said.